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Financial Statements for Harvey Norman Australia - Essay Example
Finance & Accounting
Pages 9 (2259 words)
Financial statement analysis includes using ratios to compare the financial performance of Norman Harvey Australia (Fridson, 2011). The study delves into using the activity, profitability, and liquidity ratios of Harvey Norman Australia (Roth, 2010)…
Overall, Harvey Norman Australia produced profitable 2011 and 2010 business operations. A) Analysis the Company Liquidity Position: The liquidity ratios focus on the Harvey Norman Australia’s ability to pay its liabilities on time. A company is liquid if its current ratio is positive. The company’s liquidity ratio is favorable, if the quick ratio is also positive (Brigham, 2009). 1. Current Ratio. The current ratio is shows the relationship between the company’s current assets and current liabilities. A positive current ratio shows a favorable picture of the company. The current ratio is arrived at by dividing the current assets by the current liabilities (Morrell, 2007). On the other hand, a negative current ratio indicates that the company is not able to use its current assets to pay for its currently maturing liabilities on time. Table 1 shows the company’s 2011 current ratio is 1.82 times. The above computation shows that company’s 2011 current assets (1,433,227.00) is higher than the prior year’s current assets (1,254,100). Likewise, the company’s 2011 current liabilities (786,852.00) are higher than the 2010 current liabilities (669,328.00). The ratio shows that the company’s current assets are 1.82 times higher than the company’s current liabilities. ...
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